OPINION:
COMMENTARY:
The current financial crisis and Washington’s increasingly frantic rescue attempts are only the most recent manifestations of government’s incompetence and the damage this gigantic apparatus has for decades been doing to all of us. And with the Obama-Reid-Pelosi triumvirate looming, the worst may be yet to come. They are true ideological successors of the Democrats who built the destructive monstrosity to start with.
Most severely since the 1960s, the folks in Washington have as a matter of deliberate policy been penalizing thrift, rewarding profligacy and debt, promoting imports over exports, leisure over work, and doing almost everything possible to destroy manufacturing and jobs in the United States. They’ve also put some hard hits on churches, schools, families and America’s civic traditions and culture as well.
Under pressure from government, the savings rate in the United States has dropped to zero; household debt has rocketed upward, increasing twice as fast as gross domestic product since 1980; and manufacturing employment has shrunk back to the level of 1941. Hardly anyone actually “makes” anything in America any more. We are now a nation of borrowers and lenders, salesmen and consumers, money manipulators, lawyers, litigants and government employees. AFSCME (federal, state, county and municipal employees) is the nation’s largest union and the American Bar Association is moving rapidly up in the rankings.
Because we Americans consume so much more than we produce and because government policy has made exports hard and imports easy, the U.S. merchandise trade deficit is an astronomical $700-plus billion and it has been in that range as a percent of GDP for many years. We have been able to maintain this excess consumption only by borrowing from foreigners who now own about $17 trillion of U.S. government and private debt.
We are also selling off our capital assets. Direct foreign investment in the United States, consisting of buildings, factories, banks, ports and so forth, is already upward of $2.5 trillion (and growing), compared to only $1.1 trillion in 1999. Needless to say, the more of America foreigners own, the more influence in Washington they have. With the dollar still cheap and more distress sales occurring all the time, the cash-rich Chinese government and the petro-dollar empires in the Middle East may soon be extraordinarily influential.
The top-ranked growth industry in America is the federal government itself - along with the closely affiliated “federal affairs” business that, according to the Center For Responsive Politics, typically spends about $3 billion a year directly influencing what Washington does and does not do. Swarms of for-hire lawyers, lobbyists, money-raisers and media operatives are also involved in this effort. The $3 billion estimate is almost certainly only the tip of the iceberg, but whatever the amount, it is money well spent by those who seek Washington’s favors.
Through taxing and spending, government every year reallocates roughly $3 trillion, and indirectly at least another $1.5 trillion, and it can with a flick of its regulatory wrist make you rich or poor. Influencing Washington is usually far more profitable than manufacturing a product. When Washington puts the screws to one of your competitors or otherwise tips the balance in your favor - $100 million to $500 million or so at a whack just for starters - the increase in your wealth isn’t even taxable (at least not immediately and perhaps never).
There is only so much battering from wrong-headed government policies any economy can withstand - and given that the consequences of Washington’s decades of incompetence are now on display all around the world as the financial crisis spreads, it might seem “the era of big government is over,” as Bill Clinton once predicted. Not so, however.
Robert Higgs and other historians correctly note that governments always expand during a crisis. Ours is doing so at the present moment - quite rapidly in fact - and, if the pollsters are right about Barack Obama’s good prospects in the election, Washington will soon be taken over by people whose political DNA tells them that more government is always the solution, never the problem.
Ernest S. Christian, an attorney, was a deputy assistant secretary of the Treasury in the Ford administration. Gary A. Robbins, an economist, served at the Treasury Department in the Reagan administration.
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